Programmatic video advertising on the rise
The digital advertising industry has been shifting its focus to moving image formats for years now. This is no surprise, given that the consumption of web videos will account for around 80 percent of total online traffic this year, according to the forecasts of networking solution provider Cisco – and the trend is growing. As a result, video is becoming an increasingly relevant medium for online marketing and media. In particular, the use of video ads in the context of programmatic advertising is gaining in popularity among marketers and advertisers.
In the USA, programmatic video advertising is now one of the key aspects driving the growth of the digital advertising system, and is thus a cornerstone of digital advertising strategy. Accordingly, various forecasts indicate that the budgets allocated to programmatic video in the United States will increase to over 40 billion dollars by the end of the year – with total expenditure for all digital advertising formats ranging between 130 and 140 billion dollars. By way of comparison, the total programmatic ad spend in Germany is only expected to be approximately three billion euros in 2021, according to estimations from Emarketer.
Programmatic videos: tailored, relevant, and highly effective
The programmatic placement of advertising is primarily about
- sending individually relevant messages to every potential customer and thereby addressing him or her as personally as possible
- in a suitable advertising environment and
- by automatically displaying advertising content that is adapted to personal visitor profiles.
In this sense, programmatic videos are video ads or advertising clips that are traded by means of automated, software-assisted real time bidding (RTB) processes on supply-side, demand-side, and data management platforms or ad servers. Programmatic video advertising thus combines the strengths of moving images in the form of multisensory commercials with the qualities of precise targeting, AI, machine learning, and real time bidding, since relevant video commercials can be played to a clearly defined target group in real time within the framework of other videos or another setting, for example a related editorial context. That opens up a whole range of benefits for advertisers:
- Much less wasted coverage thanks to data-based targeting
- Much more relevant advertising messages
- Customers can be addressed across various channels and devices
- Lower costs due to the bidding process and precise budget planning in line with the pursued goals
- Much greater effectiveness when planning campaigns
- Advertising spaces are bought automatically without time investments
- Real time campaign management
Programmatic connected TV and addressable TV: how programmatic advertising is entering the world of television
Two buzzwords that are often used in relation to programmatic video are programmatic connected TV and addressable TV, both of which refer to the targeted placement of advertising clips on smart TVs. The growing prevalence of Internet-enabled TV devices together with the unstoppable popularity of streaming services presents a huge opportunity for advertisers to place programmatic advertising commercials.
Via a connection to the Internet and a supply-side platform, the television set acts as a connected TV that is programmatically addressable for booking commercials and can play individualized advertising content. Especially for advertisers who have distanced themselves from TV as an advertising medium due to the high level of wasted coverage, addressable TV offers significantly more control. For example, programmatic connected TV makes it possible to precisely control which commercials are to be played when and how frequently to a target group. Not only can the TV set’s location be taken into account when placing the ad, but also criteria such as the weather, time, and the viewer’s demographic characteristics and interests.
So, is traditional TV advertising ‘out’?
In this respect, addressable TV combines the wide reach of traditional television with the digital precision tools of performance marketing. Does that signify the end of traditional TV advertising? Given the fact that TV advertising reaches 80 percent of Europeans a week and programmatic connected TV is still in its early days when you consider the availability of sufficient user data, it’s definitely too early to bid (no pun intended) farewell to linear TV advertising.
Nevertheless, addressable TV holds a lot of hope and potential for the industry and there is no doubt that this will be increasingly tapped into in the coming years.
Commercials take on new functions along the customer journey thanks to programmatic video
The possibilities of programmatic video advertising are also transforming the role of moving image advertising along the customer journey. While it used to primarily fulfill branding purposes at the start of the journey in order to generate attention and attract interest, programmatic placement gives rise to a much more diverse range of applications. Beyond mere branding, programmatic video can thus also enable companies to seamlessly reach people who are already much deeper in the funnel. What’s more, highly effective moving image content can be established at touchpoints that previously had to be targeted using less effective forms of advertising.
VCR, CPCV, and other metrics: machine learning allows optimization according to relevant KPIs
Another advantage of programmatic video advertising is that AI and the use of innovative machine learning algorithms make it much easier and more efficient to optimize campaigns according to KPIs that are based on engagement and success. In view of the multifaceted impact of ads, the cost per click (CPC) has little bearing. Other metrics such as the average play time/time on site, the video completion rate (VCR), and the cost per completed view (CPCV) are far more relevant in terms of the ROI and can be factored in much better when managing campaigns using programmatic advertising.